CARACAS -- A World Bank decision ordering Venezuela to pay $1.4 billion for the 2007 expropriation of ExxonMobil's multibillion dollar Cerro Negro investment has been annulled by a second World Bank panel.

"The Tribunal exceeded its powers by failing to apply the proper law, and the 'manifest' nature of this failure is shown by the inadequacies in the Tribunal's reasoning for the choice of applicable law," the three arbitrator tribunal at the World Bank's International Center for the Settlement of Investment Disputes (ICSID) held.

"The request for the annulment of the portion of the Award dealing with compensation is upheld in part, as follows: paragraph 404(d) of the Award is annulled."

Paragraph 404(d) of the 2014 Award by a different World Bank panel awarded ExxonMobil $1.4117 billion for the expropriation of its majority interest in its Cerro Negro development.

(d) the Respondent shall pay to the Claimants the sum of US$ 1,411.7 million (one thousand, four hundred and eleven million, seven hundred thousand United States dollars) in compensation for the expropriation of theirinvestments in the Cerro Negro Project;

Part of the original $1.6 billion judgment was not annulled, ordering Venezuela to pay $179.3 million in compensation plus interest for the expropriation of ExxonMobil's investments in the La Ceiba Project.

The Annulment panel was formed in early 2015 as result of a request from Venezuela for Annulment of the $1.6 billion award. There is no appeal of ICSID judgments but there is the possibility of annulment of an award on the basis of five grounds:

the Tribunal was not properly constituted

the Tribunal has manifestly exceeded its powers

there was corruption on the part of a member of the Tribunal

there has been a serious departure from a fundamental rule of procedure

the award has failed to state the reasons on which it is based

The Annulment Panel in this case ruled that the original Tribunal -- which studied and debated the complicated case, especially the issue of compensation, for 7 years -- had "manifestly exceeded its powers to the extent that it held that general international law, and specifically customary international law, regulated the determination and assessment of the compensation due to the Mobil Parties for the expropriation of their investment in the Cerro Negro Project, in place of the application of the provisions of the BIT [Bilateral Investment Treaty]."

The Annulment Panel members were Sir Franklin Berman (British) as President, Tan Sri Cecil Abraham (Malaysian) and Prof. Dr. Rolf Knieper (German). They were all chosen and appointed by the Chairman of the ICSID Administrative Council.

"In addition to the $1.6 billion ICSID award handed down in 2014, Exxon won a judgment of $908 million in 2011 from an arbitration at the International Chamber of Commerce (ICC) under the contract that PDVSA and Mobil had negotiated for Cerro Negro," said Russ Dallen, an international lawyer and banker who follows Venezuela. "That $908 million judgment against Venezuela has been paid and stands and is unaffected by this decision."

Thomas L. Cubbage III, Miguel López Forastier, and Mary T. Hernández with Covington & Burling's Washington office, and Gaëtan Verhoosel, Scott Vesel, and Simon Maynard with Three Crowns in London represented ExxonMobil in the Annulment battle as well as the Original Decision.

George Kahale III, Benard V. Preziosi Jr., Miriam K. Harwood, and Gabriela Álvarez-Ávila in Curtis, Mallet-Prevost, Colt & Mosle's New York and Mexico offices made up Venezuela's legal team in both the Annulment and the Original Decision.

"Under ICSID rules, ExxonMobil now has the right to request the resubmission of the dispute to another new Tribunal to again look at the original award in the case," said Dallen. "I would imagine that ExxonMobil cannot be happy with this outcome after 10 years of litigation and the loss of its investment and will resubmit its defense of the award for a second opinion."

Venezuela has 24 cases at ICSID still pending against it for a wave of expropriations and nationalizations taken by former leader Hugo Chavez and his hand-picked successor Nicolas Maduro. Air Canada filed the latest ICSID case against Venezuela in January.

Venezuela has lost a number of other costly cases recently. Mining company Gold Reserve has an award for $790 million that it is trying to enforce against Venezuela around the world. Miner Crystallex has a $1.4 billion dollar judgment that it is currently registering in the U.S. courts. Mining company Rusoro has a $1.2 billion judgment. Container-maker Owens-Illinois has a $455 million judgment that it is trying to get registered in the U.S. but Venezuela has been trying to avoid service of the summons. And oil driller Tidewater has a judgment for $45 million.

"Venezuela dodged a bullet," says Dallen. "And it also proves once again that Curtis Mallet lawyer George Kahale is the king of expropriation defense -- the guy is the Prince of Darkness when it comes to foreign investment. Kahale's is one bill that Venezuela better make sure it pays."